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WOWGR is set to be heavily modified in March 2025, when it will just cover Warehousekeepers. Here are the updates and what it means for whisky cask investment.

WOWGR, which is short for The Warehousekeepers and Owners of Warehoused Goods Regulations, has been a point of contention within the whisky industry since it was introduced in 1999. The amendments that have just been announced bring the warehousing of duty suspended whisky casks in line with those of wine. The update is expected to have knock-on consequences for a number of cask investment companies, who had been in disagreement about what WOWGR meant for private individuals.

What Has Changed With WOWGR?

Nothing… yet. The changes to the Statutory Instrument (SI) known as WOWGR won’t come into effect until 3rd March 2025. In 2025 the SI won’t go, but will be heavily modified, essentially they are removing OWG (Owners of Warehoused Goods).

Alan Powell has been spearheading the petition for changes to the legislation over the last few years. He explained to me via email, “The change to the regulations that I have been campaigning for the last few years will remove the disproportionate impositions for beer and spirits which were also always in breach of (retained) EU law and are obviously discriminatory—alcohol products being treated differently for no objective reason.”

The Contentions For Private Whisky Owners

WOWGR currently covers all revenue traders (businesses) who hold casks in a warehouse. Importantly there is already a section that excludes non-revenue traders (private individuals) so as long as they weren’t trading in whisky, private individuals could hold a small number of casks in their name at a warehouse without being covered by WOWGR. 

Some cask dealers interpreted it differently and said that WOWGR was a requirement for all cask owners. This meant the dealer went through the lengthy process of acquiring a WOWGR and all their customers owned casks through them. In this model the dealer remained the “registered owner” in the eyes of the warehouse and therefore HMRC. While many did this as a legitimate business model, it has also proven problematic 

Being one step removed from full ownership has meant that some customers have struggled to reclaim their casks following their dealers disappearing or going into liquidation.

Alan Powell has been spearheading the changes, and HMRC have said to him: “Our officers would consider each case on its own merits. Contracts of sale/purchase are necessary to establish whether the buyer has absolute or a qualified ownership of the goods but the types of documentation which would help support a claim of ownership would include: purchase invoices; evidence of payment including—amount paid/method of payment; contracts of sale/purchase and any other relevant documentation supplied to the buyer by the seller.”

It’s good to hear that from HMRC. However, it may not help if the customer was not provided with accurate or full information by their dealer and therefore cannot locate their cask.

Cask Investment Industry Improvements

For Private Individuals who already own casks directly and have existing accounts, the changes are welcome. It means that private individuals do not need to worry about falling over the invisible line into “revenue trader,” which means they can now own more than five casks. That allows portfolios to be built and whisky casks to be traded freely in the same manner as wine investments.

In this way the changes are a welcome change to the cask investment industry as a whole. Hopefully the removal of “OWG” lays the foundations for whisky casks becoming a vibrant internationally recognised alternative asset in the same way as wine.

Warehousing Issues

While the repeal of OWG should certainly simplify things, it may also cause issues for some dealers going forward. This is because many warehouses don’t allow private individuals to open new accounts, which are required for direct ownership. There are a few reasons as to why, but largely the multibillion pound scotch whisky industry is set up for business-to-business dealings and private cask ownership is a fraction of the market. Warehouses are used to dealing with hundreds of casks for a small number of registered owners, rather than hundreds of unregistered owners that own a small number of casks, and for many warehouses the additional admin is not worthwhile.

Where dealers had told their customers they explicitly couldn’t own casks directly because of WOWGR the changes could cause issues if they cannot get their partner warehouses to create accounts for their customers but customers now insist on owning them directly. This may put strain on the industry and potentially cause a flood of requests with warehouses where private accounts are openable. So it remains to be seen how it will impact storage charges etc going forward.

Industry Reputation Concerns

While OWG may have been inconvenient, it did at least stand as a barrier to less scrupulous businesses setting up in the cask investment industry. Even with the current lengthy WOWGR application process, we have already seen a significant number of issues that potentially threaten the legitimacy of the whisky industry.

In 2022 the FBI shut down a rogue cask investment operation, while in 2024 the City of London Police shut down Cask Whisky Ltd. for an investigation into potential fraud. That isn’t counting the others that have not made it into the press. The removal of OWG could mean that it is easier for this kind of company to set up as ultimately it puts the onus on vetoing new businesses entirely in the hands of the warehousekeepers.

No changes are ever completely without their challenges. So while I look forward to seeing how the new changes shape the cask investment industry for the better, I urge potential cask investors to remain vigilant and continue to do their due diligence as the changes are introduced.